What Are Bitcoins and How Do They Actually Work: Everything You Need to Know

If you find the term bitcoins confusing, don’t worry as you are not alone! Read and discover what are bitcoins and how do they actually work!

Bitcoin – currently the most popular virtual currency on the web! Even though it has existed for a few years now, a lot of people have questions about bitcoins and how do they actually work? Are they legal? Where can you buy bitcoins? Why did they split into 2 categories – bitcoin and bitcoin cash? If you find the term bitcoins confusing, don’t worry as you are not alone, luckily you are at the right place.

In this article, we are going to explain everything you need to know about Bitcoins.

What Are Bitcoins?

Bitcoin is the first and currently, the most popular cryptocoin ever invented. There is no information who created bitcoins but one thing is for sure – cryptocurrencies are designed for absolute anonymity. Bitcoins first appeared 8 years ago, in 2009, from a supposed developer Satoshi Nakamoto. It is believed that he has disappeared and left behind the Bitcoin empire.

One of the benefits of Bitcoins is that it can be stored offline. How? On a person’s local hardware. This process is known as a cold storage and it actually protects the currency from being stolen or taken by others.

How Bitcoins Work?

Bitcoins are virtual coins which are specially designed to be self-supporting and independent for their value. This means that there is no need for banks and other institutions to move and store the money. Once you buy bitcoins, they are like physical gold coins. In other words, they own the value and trade just as if they were gold coins in your pocket. If you want, you can use your bitcoins to buy products and services online, or keep them safe and hope their value will increase over time.

Bitcoins are traded with the help of wallets. They are traded from one personal bitcoin wallet to another and that is how the process goes. A bitcoin wallet is a small database that you store on your PC drive, on your tablet, on your smartphone, or somewhere in the cloud.

It is known that bitcoins are resistant to forgery. It is almost impossible to create a bitcoin and it is not financially worth to manipulate the system.